The Implications of the Privatization of Space Exploration

December 12, 2016

Ever since the legalization of privatized space travel in 2004, more and more companies have been joining in on a new space race.[1] In recent years, companies such as SpaceX and Virgin Galactic have been taking a more active role in space travel. For example, some companies now bring cargo to the International Space Station through private space shuttles and mine precious metals from asteroids.[2] Here we discuss the implications of the privatization of space exploration.

By Lina Shi

Background

The dream of space exploration has existed throughout human history. Like many other scientific breakthroughs in the US, the capability of space exploration came as a result of military research and development. The merits of long-distance rockets as weapons were realized during World War II, which led to the founding of missile programs by both the United States and the Soviet Union. Throughout the Cold War, the space race continued with each country outdoing the other in space exploration progress, from Sputnik to the Apollo moon landings.[3]

A Brief History of Space Exploration

However, as the Cold War (and the threat of communism) waned and the fall of the Soviet Union appeared inevitable, the American public became less interested in exploring the cosmos. Since 1993, the budget for NASA has never totaled over 1% of the overall federal budget, in contrast to the whopping 4.41% share of the federal budget it had in 1966. While NASA spent around $44 billion 2015 dollars at the height of the space race, in recent years the agency has received less than half of that amount around $18 billion dollars for its annual budget.[4]

NASA as a share of the federal budget significantly decreased over time

Especially in the modern world of divisive politics in which budgeting priorities are heavily debated, NASA and government funded space exploration have been deprioritized. Since spending for space exploration has not kept up with inflation, major budget cuts have caused many of NASA’s programs to shut down. For example, the Space Shuttle program, which brought astronauts and important cargo pieces to the International Space Station, was discontinued in 2011 due to NASA budget cuts.[5]

To fill the void left by discontinued NASA programs, many private companies have received commissions from NASA to perform important functions. For instance, in place of the Space Shuttle program, NASA has formed Commercial Resupply Services contracts with commercial space companies SpaceX and Orbital ATK to deliver cargo to resupply the International Space Station.[6] While American astronauts currently have to borrow a ride from the Russian vehicle Soyuz to reach the ISS [7], NASA is working on the Commercial Crew Program in conjunction with SpaceX and Boeing to develop spacecraft that can carry astronauts to low-Earth orbit and the ISS.[8]

Benefits

The biggest cited benefit of the privatization of space travel is it’s cost-effectiveness. For example, whereas the old Space Shuttle program cost around $4 billion each year, the new commercial resupply services contracts only cost around $50 million per launch. [9] Thus, NASA now has more money available to spend in other areas. Instead of being bogged down by the routine application of old research, NASA can prioritize their limited budget to work more on research of other unknowns and development of new long-term space travel technologies. Additionally, with many private companies all developing new space technologies, there is more competition for innovation, which may also lead to faster growth in the field of space technology.[10]

Supporters of privatization argue that the push for exploration by private companies will increase innovation.

Proponents of privatized space travel also point out that the private sector often transforms government developed technologies into lucrative or affordable technologies and products for the general public. The space industry is especially full of opportunities, both for its natural resources and tourism. On the natural resources side, precious metals, minerals, and energy are available in infinite supply in space. For instance, one average half-kilometer S-type asteroid is worth more than $20 trillion dollars. [9] Multiple companies have started low-Earth orbit technology to allow people to be launched into space for a short trip. For example, Virgin Galactic famously offers short flights into space for $250,000 dollars. [11] Although the current price is cost prohibitive, limiting this service’s potential market, private companies have time to develop government technologies to be more cost-effective in the future. Altogether, these private space exploration companies will take advantage of the opportunities to push existing technology to create jobs and boost the economy.

Costs

Although there are many benefits to privatization, critics are quick to point out that this is an overly optimistic picture. In reality, many private space exploration companies overpromise and underdeliver. In the industry, there have been myriad cases of failed public-private partnerships. For instance, NASA’s partnership with Lockheed Martin for an X-33 space shuttle design cost NASA $912 million and Lockheed Martin $357 million. [12]

Additionally, while companies are often able to implement decisions and fund projects faster than NASA, they also have to deal with different competing interests.[13] While NASA has to answer to the interests of the government and taxpayers, private companies have to take into account profitability, the interests of a variety of shareholders, and reliance on a secure contract with NASA. Since profitability is a major factor in a lot of decision making, programs that focus on the general development of space exploration and knowledge, but lack immediate commercial applications, may not be developed. This suggests that there is still a place for the government in space exploration research and development.

Conclusion

Although there are pros and cons to privatizing space exploration, current trends suggest that many of NASA’s space exploration responsibilities are being shifted towards the private sector under government contracts. Through private-public partnerships, the United States moves into its next era of exploring the cosmos. Whether this new model will produce discoveries and innovation in-step with former government run space research is yet to be seen.

<h3>Internal Revenue Service: Tax Statistics</h3><p><img width="155" height="200" alt="" src="/live/image/gid/4/width/155/height/200/486_irs_logo.rev.1407789424.jpg" class="lw_image lw_image486 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/155/height/200/486_irs_logo.rev.1407789424.jpg 2x" data-max-w="463" data-max-h="596"/>Find statistics on business tax, individual tax, charitable and exempt organizations, IRS operations and budget, and income (SOI), as well as statistics by form, products, publications, papers, and other IRS data.</p><p> Quick link to <strong>Tax Statistics, where you will find a wide range of tables, articles, and data</strong> that describe and measure elements of the U.S. tax system: <a href="http://www.irs.gov/uac/Tax-Stats-2" target="_blank">http://www.irs.gov/uac/Tax-Stats-2</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>

<h3>Congressional Budget Office</h3><p><img width="180" height="180" alt="" src="/live/image/gid/4/width/180/height/180/380_cbo-logo.rev.1406822035.jpg" class="lw_image lw_image380 lw_align_right" data-max-w="180" data-max-h="180"/>Since its founding in 1974, the Congressional Budget Office (CBO) has produced independent analyses of budgetary and economic issues to support the Congressional budget process.</p><p> The agency is strictly nonpartisan and conducts objective, impartial analysis, which is evident in each of the dozens of reports and hundreds of cost estimates that its economists and policy analysts produce each year. CBO does not make policy recommendations, and each report and cost estimate discloses the agency’s assumptions and methodologies. <strong>CBO provides budgetary and economic information in a variety of ways and at various points in the legislative process.</strong> Products include baseline budget projections and economic forecasts, analysis of the President’s budget, cost estimates, analysis of federal mandates, working papers, and more.</p><p> Quick link to Products page: <a href="http://www.cbo.gov/about/our-products" target="_blank">http://www.cbo.gov/about/our-products</a></p><p> Quick link to Topics: <a href="http://www.cbo.gov/topics" target="_blank">http://www.cbo.gov/topics</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>

<h3>National Center for Education Statistics</h3><p><strong><img width="400" height="80" alt="" src="/live/image/gid/4/width/400/height/80/479_nces.rev.1407787656.jpg" class="lw_image lw_image479 lw_align_right" data-max-w="400" data-max-h="80"/>The National Center for Education Statistics (NCES) is the primary federal entity for collecting and analyzing data related to education in the U.S. and other nations.</strong> NCES is located within the U.S. Department of Education and the Institute of Education Sciences. NCES has an extensive Statistical Standards Program that consults and advises on methodological and statistical aspects involved in the design, collection, and analysis of data collections in the Center. To learn more about the NCES, <a href="http://nces.ed.gov/about/" target="_blank">click here</a>.</p><p> ﻿Quick link to NCES Data Tools: <a href="http://nces.ed.gov/datatools/index.asp?DataToolSectionID=4" target="_blank">http://nces.ed.gov/datatools/index.asp?DataToolSectionID=4</a></p><p> Quick link to Quick Tables and Figures: <a href="http://nces.ed.gov/quicktables/" target="_blank">http://nces.ed.gov/quicktables/</a></p><p> Quick link to NCES Fast Facts (Note: The primary purpose of the Fast Facts website is to provide users with concise information on a range of educational issues, from early childhood to adult learning.): <a href="http://nces.ed.gov/fastfacts/" target="_blank">http://nces.ed.gov/fastfacts/#</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>

<h3>Federal Reserve Economic Data (FRED®)</h3><p><strong><img width="180" height="79" alt="" src="/live/image/gid/4/width/180/height/79/481_fred-logo.rev.1407788243.jpg" class="lw_image lw_image481 lw_align_right" data-max-w="222" data-max-h="97"/>An online database consisting of more than 72,000 economic data time series from 54 national, international, public, and private sources.</strong> FRED®, created and maintained by Research Department at the Federal Reserve Bank of St. Louis, goes far beyond simply providing data: It combines data with a powerful mix of tools that help the user understand, interact with, display, and disseminate the data.</p><p> Quick link to data page: <a href="http://research.stlouisfed.org/fred2/tags/series" target="_blank">http://research.stlouisfed.org/fred2/tags/series</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>

<h3>The Penn World Table</h3><p> The Penn World Table provides purchasing power parity and national income accounts converted to international prices for 189 countries/territories for some or all of the years 1950-2010.</p><p><a href="https://pwt.sas.upenn.edu/php_site/pwt71/pwt71_form.php" target="_blank">Quick link.</a> </p><p>See all <a href="/data-resources/">data and resources</a> »</p>

<h3>National Bureau of Economic Research (Public Use Data Archive)</h3><p><img width="180" height="43" alt="" src="/live/image/gid/4/width/180/height/43/478_nber.rev.1407530465.jpg" class="lw_image lw_image478 lw_align_right" data-max-w="329" data-max-h="79"/>Founded in 1920, the <strong>National Bureau of Economic Research</strong> is a private, nonprofit, nonpartisan research organization dedicated to promoting a greater understanding of how the economy works. The NBER is committed to undertaking and disseminating unbiased economic research among public policymakers, business professionals, and the academic community.</p><p> Quick Link to <strong>Public Use Data Archive</strong>: <a href="http://www.nber.org/data/" target="_blank">http://www.nber.org/data/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>